Prepare a Budgeted Product Cost

Prepare a Budgeted Product Cost
Assignment Task



Task

Question 1


Khumalo Oil Manufacturers plan to produce a new product called Double P and the following information is available.

produce a new product called Double P and the following information is available.

1.1 Calculate the marginal income per unit 


1.2 Calculate the break even quantity 


1.3 Calculate the break-even value 


1.4 Calculate the marginal income ratio



Question 2


ABC Ltd. has a single manufacturing process of which the following overhead cost estimates are available for the period ending 31 December 20X2:

ABC Ltd. has a single manufacturing process of which the following overhead cost estimates are available for the period ending 31 December 20X2:



Three products, namely A, B and C, are manufactured by labourers. The raw material arrives in bundles and is then processed further using electrical drills, which are operated by hand. The labourers are paid a wage of R50 per hour. The following estimates are applicable for the period ending 31 December 20X2:

The following estimates are applicable for the period ending 31 December 20X2:



Overheads are currently allocated to products by means of a rate based on labour hours.


An activity-based investigation identified the following cost drivers:

An activity-based investigation identified the following cost drivers:

Round off all your figures to two decimal places.

2.1 Prepare a summary for the budgeted product cost per unit for each product (A, B and C) for the period ending 31 December 20X2, where the unit cost for each of the cost elements is set out:

In terms of the current method of overhead allocation

2.2 Prepare a summary for the budgeted product cost per unit for each product (A, B and C) for the period ending 31 December 20X2, where the unit cost for each of the cost elements is set out by using the identified cost drivers and on the basis of ABC principles



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